M5: Quizzes Flashcards
The DOL can assess penalties on plan sponsors up to __ per annual Form 5500 report filing where the required auditor report is missing or deficient.
A. $60,000
B. $40,000
C. $35,000
D. $50,000
Answer: D. $50,000
Study Guide, Module 5, Pg. 10, Learning Outcome 2.1
Textbook, Pg.187
The types of deficiencies and weaknesses that auditors commonly communicate to management include of the following, EXCEPT:
A. Internal plan processes
B. Regulatory requirements
C. Audit costs
D. Outside service providers
Answer: C. Audit costs
Study Guide, Module 5, Pg. 19, Learning Outcome 4.5
Textbook, Pg. 206
FASB ASC Topic ______ Plan Accounting-Defined Benefit Pension Plans, establishes the accounting and financial reporting standards for defined benefit retirement plans.
A. 965
B. 962
C. 960
D. 961
C. 960
Study Guide, Pg. 7, Learning Outcome 1.2 (1); Text, Pgs. 179-180
The DOL can assess penalties on plan sponsors up to _______ per day (capped at $50,000 per annual Form 5500 report filing) where the required auditor report is missing or deficient.
A. $900
B. $1,000
C. $1,200
D. $1,100
D. $1,100
Study Guide, Pg. 10, Learning Outcome 2.1; Text, Pg. 187
A plan administrator _______ have the right to examine an auditor’s work papers for any purpose, including to assess audit quality.
A. does
B. does not
C. may
D. may not
B. does not
Study Guide, Pg. 12, Learning Outcome 2.9; Text, Pg. 193
FASB ASC Topic ______, Plan Accounting - Health and Welfare Benefit Plans, provides the accounting and financial reporting standards for health and welfare benefit plans.
A. 962
B. 963
C. 960
D. 965
D. 965
Study Guide, Pg. 7, Learning Outcome 1.2; Text, Pg. 179-180
A is a written communication
intended for plan management and those charged with governance.
A. management letter
B. management comments letter
C. governance letter
D. plan management letter
B. management comments letter
Study Guide, Pg. 18, Learning Outcome 4.4; Text, Pg. 205
There are ______ common types of deficiencies and weaknesses that auditors communicate to management.
A. two
B. five
C. three
D. four
C. three
Study Guide, Pg. 18, Learning Outcome 4.3; Text, Pg. 205
In _______, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards Codification (ASC), as the single source of authoritative, non- governmental, generally accepted accounting principles (GAAP).
A. 2011
B. 2010
C. 2008
D. 2009
D. 2009
Study guide Pg. 1. Overview
All pension plans that issue financial statements in conformity with GAAP, including plans with fewer than participants, are covered by ASC Topic 960.
A. 50
B. 200
C. 100
D. 75
C. 100
Study Guide, Pg. 7, Learning Outcome 1.4; Text, Pg. 180-181
Plan investments should be presented at their _______ value, except for insurance contracts, which should be presented in the same manner as required for filing under ERISA.
A. actuarial
B. fair
C. net
D. original
B. fair
Study Guide, Pg. 8, Learning Outcome 1.5; Text, Pg. 181
The 2014 DOL audit quality study showed that nearly four out of ten employee benefit plan audits had _______ deficiencies that adversely affected overall quality and that the remaining plan audits either complied with professional
auditing standards or had minor deficiencies.
A. Acceptable-minor
B. Unacceptable-major
C. Unacceptable-minor
D. Acceptable-major
B. Unacceptable-major
Study Guide, Pg. 11, Learning Outcome 2.2; Text, Pg. 188
FASB ASC Topic 960 is generally not consistent with the views of the U.S. Department of Labor and the American Academy of Acturaries.
True or False?
False
ASC Topic 960 is generally consistent with the views of the U.S. Department of Labor (DOL) and the American Academy of Acturaries (the Academy).
M5 pg 181
Accounting, operations and upper management tend to be the most frequent departments where fraudulent activity occurs.
True or False?
TRUE
ASC 965 Provides the accounting and financial reporting standards for defined contribution retirement plans.
True or False?
False
ASC 965 provides the accounting and financial reporting standards for Health and Welfare Benefit Plans
M5 pg 180
Plans maintained outside the United Sates that are similar to plans maintained in the United States are not subject to Topic 960 rules, even if the financial statements of such plans are intended to conform to U.S. GAAP.
True or False?
False
Plans maintained outside the United Sates that are similar to plans maintained in the United States ARE also subject to Topic 960 rules, if the financial statements of such plans are intended to conform to U.S. GAAP.
M5 pg 180
ASC Topic 960 applies to government-sponsored social security plans.
True or False?
False
ASC Topic 960 does NOT apply to government-sponsored social security plans.
M5 pg 181
The DOL can assess penalties on plan sponsors of up to $1,200 per day where the audit report is missing or deficient.
True or False?
False
The DOL can assess penalties on plan sponosrs of up to $1,100 per day (capped at $50,000 per annual 5500 report filing) where the required auditor’s report is missing or deficient.
M5 pg 187
The two types of fraud are misappropriation and financial statement fraud.
True or False?
True
M5 pg 214
Codes of ethics and routine ethics training sessions reduce median fraud losses by more than $150,000 per incident.
True or False?
False
$100,000
M5 pg 218
The goal of statement on Auditing Standards No. 136 was to improve the quality of the audits of ERISA plans.
True or False?
True
M5 209
The three fraud plan risk factors are the presence of incentives or pressures to commit fraud, opportunities to carry out the fraud, and attitudes and rationalizations to justify the fraud.
True or False?
True
M5 pg 215
The purpose of ASC Topic 960 is _____________.
A. Generally consistent with the views of the U.S. Department of Labor
B. Most private pension plans will not be able to prepare one set of financial statements for ASC Topic 960
C. Generally not consistent with the views of the American Academy of Actuaries
D. ASC Topic 960 establishes financial accounting and reporting for defined contribution pension plans
A. Generally consistent with the views of the U.S. Department of Labor
Text pg 181
ASC Topic 960 addresses the topic of ________________.
A. Plans applying to government-sponsored social security plans
B. Plans with intermediary funding agency
C. All pension plans that issue financial statements in conformity with GAAP
D. Plans not maintained outside the United States
C. All pension plans that issue financial statements in conformity with GAAP
Text pg 180
The amount of penalties DOL can assess on a plans sponsor if an auditor report is missing or deficient is ______.
A. Capped at $75,000 per annual Form 5200
B. Up to $1,200 per day
C. Capped at $50,000 per annual Form 5200
D. Up to $1,100 per day
D. Up to $1,100 per day
Text pg 187
All of the following are actions EBSA takes in response to the continued decline of employee benefit plan quality, EXCEPT:
A. It electronically reaches out to Plan Administrators who hire auditors to offer them tips for selecting an auditor and what to expect from a well performed audit
B. It can reject a plan’s annual Form 5500 filing until plan audit deficiencies are remediated
C. It assesses civil penalties against the plan sponsor until plan audit deficiencies are remediated
D. It assesses civil penalties against CPA firms performing deficient audits
D. It assesses civil penalties against CPA firms performing deficient audits
An engagement letter should contain all of the following EXCEPT:
A. A reference to the expected form and content of reports
B. A statement that due to the extent of the audit, all material misstatements will be detected
C. A statement that circumstances may occur in which a report may differ from its expected form and content
D. Objectives and scope of the audit
B. A statement that due to the extent of the audit, all material misstatements will be detected
Text pg 198
Which of the following is an item that the management comments letter should contain?
A. Whether there is a present intention to terminate the plan
B. That the auditor does not have the option of discussing other less severe deficiencies in internal control
C. That weaknesses do not include less severe deficiencies that are not significant or material
D. If items are communicated orally, the auditor should not document the communication
A. Whether there is a present intention to terminate the plan
Text pg 200
The goal of the Statement on Auditing Standards No. 136 is ______________.
A. To avoid disclosure of information on the nature and scope of ERISA benefit plan audits
B. Not to improve the quality of audits of ERISA plans, but just to restate the requirements
C. To clarify each party’s role and responsibility throughout the audit process
D. To clarify that the auditor’s responsibilities do not have to be disclosed in the auditor’s report
C. To clarify each party’s role and responsibility throughout the audit process
Text pg 211
A change that has occurred for “limited scope audits” since SAS 136 became effective is ______________.
A. In the past, limited scope audits accounted for a small percentage of financial audits and allowed auditors to issue a disclaimer opinion without giving a formal option
B. SAS 136 renamed the former limited scope audit as an ERISA Section 103(a)(3)(B) audit
C. Plan sponsors are required to first investigate and confirm whether the plan is eligible for an ERISA Section 103(a)(3)(C) audit
D. SAS created a four-part opinion
C. Plan sponsors are required to first investigate and confirm whether the plan is eligible for an ERISA Section 103(a)(3)(C) audit
Text pg 210-211
A characteristic of a type of fraud known as misappropriation is _________.
A. It’s illegal use of the property or funds of another person for one’s own use
B. Auditors have the most concern about it
C. A plan’s financial statements may be compromised in an attempt to deceive plan participants and others who rely on the information for decision making
D. Illegal use is usually by non-public officials
A. It’s illegal use of the property or funds of another person for one’s own use
Text pg 214
The main fraud risk factors include ____________________.
A. No rationalization to justify fraud
B. Opportunities to carry out fraud
C. Employees are not the best source for tips and valuable information regarding those committing fraud
D. No incentives or pressures to commit fraud
B. Opportunities to carry out fraud
Text pg 214
